More on the Gas Run

Gas prices surge as Ike moves in | ajc.com.

States warn gas stations against price gouging

These stories is just full of juicy quotes about indignant consumers (read: voters) about this gas run.  I’ll present some quotes:

Larry Ruiz of Duluth said it cost him $45 Tuesday to fill up his small pickup. Friday, it cost him $60. “It really is just too expensive,” he said. “The government has lost control of the gas.”

Larry, the government doesn’t have control over gas prices.  At all.  It controls one thing, the location and siting of oil refineries.  You know who has control over gas prices?  You.  But I bet you’re not willing to take responsiblity for your actions.  It’s alot easier to set blame on the government than yourself.

The wholesale price for a gallon of gasoline rose about $1, to $4.25, Thursday morning, topping the high price five years ago when hurricanes Katrina and Rita raked the Gulf Coast, said Tom Kloza, publisher of the Oil Price Information Service in Wall, N.J. It was uncertain whether that price spike will filter down to the retail level.

“It’s pure panic,” Kloza said. “It’s related to the fact that there are worries about whether there’s going to be enough (gasoline) in the distribution system to satisfy some of the September pumping needs on the Gulf Coast.”

More proof that this is a run.  People don’t know if there’s going to be supplies, so they hoard.  This will become a self-fulfilling prophecy.

“Every time there’s a hurricane this happens. They’re just doing this to rip people off,” said 19-year-old Megan Cohen, a South Carolina college student who settled for paying $4.11 a gallon after going to three stations.

Uh, this wasn’t the case in any other hurricane season except following Katrina, Megan.  It hadn’t happened with any of the hurricanes this year, including Gustav, which hit another large section of the oil and gas producing area of the country.  But Megan, you’re not helping by going to three gas stations and “settling” for $4.11 a gallon.  This means that you didn’t need gasoline (then why go to three stations unless they were out, and there’s an easy way to figure out if the station is empty: noone’s getting gas).  But Megan probably has never taken an economics class at her South Carolina college, otherwise she would know about SUPPLY AND DEMAND.  It’s not that hard people.  Less supply means prices go up.  Demand going up sharply because of panic buying means prices go up even futher.  Or, if they don’t go up quickly enough, there’s a shortage.

S.C. Gov. Mark Sanford asked residents to avoid filling up unless necessary. “Instead, this is a time to think of ways in which each of us can make a difference on what may come our way if refineries in Texas are significantly damaged,” Sanford said in statement. “It might mean riding to the football games with a neighbor or on Sunday riding to church with a friend. It might mean watching a video at home rather than going to the movies or riding to work with a co-worker.”

I know there’s not alot that can be done legally, but as the leader of a state, can’t Mark do something with a little more leadership?  Making a difference?  Throwing out silly suggestions?  This is wimpy politico talk here.  Man up, Mark!  Tell people to stop being so stupid and panicking, if this isn’t a problem.  If it is… be more forceful in telling them that this might be the case for a while.  But if this is his idea of leadership, then this state’s got problems.  This was also true of the Hanna situation, which was equally feeble in the public response.

In South Carolina – where gas prices increased about 20 cents a gallon on average Friday – Attorney General Henry McMaster said gas stations that price gouge would face criminal prosecution. He did not set a threshold, saying each case must be investigated separately to see whether prices were raised to an “unconscionable” level.

But putting the gouging laws into effect?  Now THAT’S going to make things better!  Making the suppliers walk on egg shells in pricing so that if some 19-year old tart with no clue of how things work gets pissed off and files a complaint, then you’ll have to deal with investigations for the next year.  Or you could price it so low that you’ll be out in 5 minutes, but you don’t have to deal with the state lawyers.  Or you could just go on vacation for the next 15 days until this expires.  Then you’re fine and it’s only the customers who get screwed.  But we already knew that about these types of laws.

North Carolina Republican Congressman Robin Hayes called for a federal investigation into some prices rising more than $1 per gallon in a day.

“I understand there is a substantial hurricane in a sensitive area of the country, but this dramatic spike in gas prices is breathtaking,” he said.

I just wanted to point out the party of the pandering politician here.  What’s a federal investigation going to do that the myriad of state investigations won’t?  Oh, that’s right.  Make it seem like you’re doing something about it.

Run on Gas in South Carolina

The State | Gas reaching $5 in Columbia

Everyone knows what a bank run is.  Someone gets word that the bank is close to failure, or doesn’t have enough deposits to carry through to the next business day.  So people want to get their money out before the well dries up.  One person sees this and thinks the same thing, and it continues until the bank actually runs out of money.  This could even be the case when the bank IS solvent and would have had enough money to stay open during normal operations, but the stampede action and groupthink mentality forces the bank to close because they couldn’t satisfy the demands of it’s depositors.

The same thing is starting to happen in South Carolina.

I first heard about the run this morning (shows how much I’m in the loop around here), but at that point, I was probably asleep when it started yesterday afternoon and into the evening.  When I got into work, two things caught my attention.  The first was that the Pitt Stop gas station had run out of gas, as evidenced by the bags on the nozzles.  The second was that I looked down the street to the Gator (independent) gas station and thought I saw a 4 in the dollar place.  I thought I was seeing things though at the time.  Then while at work, the supervisor notified all of us that we were to fill our tanks completely when we finished our routes, because there would be shortages of gas this weekend and going into next week.

The run was on.

By the time I left the city, gas was already at $3.73 to $3.92 and there were reports on the radio that there had been long lines in Sumter and Lexington.  Driving to Myrtle Beach was a mixed bag.  The truck stops (Pilot) along I-20 and I-95 were showing normal prices, at least the same as yesterday, $3.62 or so.  Then when turning on the local sports radio show, I was somewhat surprised when the announcer started off the show by going on a rant about gas prices.  Basically, he was saying that anyone charging over $4 a gallon was “gouging you” and that you should talk to the manager.  As he was saying this, he announced that the Markette convenience store he was broadcasting from dropped their price from $4.20 to $3.93.

Continuing on to Myrtle Beach, I saw a trend appearing.  Most stores had raised their price to $4, but the ones that had left them at $3.80 or so had nothing left.  At the Costco in Myrtle Beach, I saw about 15 cars getting gas (this was at approx 10:15 AM), not surprising for Costco on some mornings.  When I left about 10 minutes later, the amount of cars waiting had doubled, with cars beginning to block the entrance to the store.  The price was a relatively miniscule $3.52.  The cheapest in the state at the time, most likely.

For the rest of the drive, I could see that prices were in the $3.60 to $3.80 range but nothing out of the ordinary.  One store, the Petro United in Surside Beach, was at $3.58 and there wasn’t a line of cars there.  The remainder of the drive to Georgetown was uneventful in terms of long lines or high prices.

The trip back to Columbia was an entirely different story.  While local news didn’t have anything to say about the gas prices, the Fox News national report had an excerpt about how “one regional gas store that operated in 11 southeast states” was asking customers to limit this information, but nothing else was new here, as this was already reported locally.

When I arrived in Lake City, that all changed.  The first store I saw (a little mom-and-pop), had taped over their $3 with $4 sheets of paper.  It was $4.57.  I thought that this was just a little store taking advantage of the situation.  Not even close.  Getting into the downtown area of the town, I saw how relatively ;inexpensive; this all was.  One store was at $4.70 and a group of three at the main intersection of US-52 and Business 378 were all at $4.80 a gallon.  It was also the first time that I saw any price (including premium) at $5 as well.

Going from there to Sumter I saw a pattern emerge.  Anyone who was actually selling gas had their price set at $4.  Anyone not selling gas had a price below that (probably because they ran out at that price).  This continued all the way into Columbia.  There, prices were generally at $4 with the cheapest being $3.90 at a Murphy USA (read Walmart).  I was able to fill up at $4 at a Sunoco, although some of their pumps said that they only had diesel remaining.  I pumped regular, paid the regular price (vs. the cheaper diesel price), so I should have regular in my tank.  If I don’t, then I suppose Monday will be an interesting trip to the coast.

Getting back to my workplace, I saw that the two places that tipped me off this morning had changed their prices.  The Pitt Stop had raised their price to $4.30, but they had gas.  The Gators…$5.  The highest I’ve seen in the state.

And people are still flocking to get gas as far as I can see.

So while nobody is talking about it, there is a full-fleged run on gas in South Carolina, and perhaps in the Southeast.  And there’s no FDIC to backstop this run.

Weekend Post – Obama Doubles Down on Stupid Ideas

Just when I thought Obama might just leave well enough alone and just encourage conservation through words, he comes out with six pages of emphasizing the really bad part of his strategy to give the appearance of his caring for high gasoline prices.

An “Emergency” Economic Plan by Obama

Here’s just a rundown of the faults:

• Another stimulus/rebate check. This time $500 a person. This time paid for by a 5 YEAR windfalls profit tax. This isn’t temporary, it’s permanent. And what happens if there aren’t “windfall profits” four or five years from now?
• $50 billion slush fund in the form of two congressional pork troughs, a direct grant to states and a “jobs and growth” fund.
• He asks for a “reasonable share of profits”… reasonable by what definition of the word
• Obama completely ignores economics. McCain has at least admitted his ignorance on the issue, but Obama’s is completely ass-backwards in terms of economics. Imposing a tax 5 years from now is just going to make prices higher NOW and IN THE FUTURE. Suppliers are going to cut back on supply (because they can, and why take a tax hit now when you can wait 5 years and get all of the profit on pumping oil), and that’s going to raise the price of oil.
• Then there’s Obama’s construction slush fund. This is going to be spent well, and there’s absolutely no room for corruption with having $25 billion to throw around on roads and school construction.

Now, I wouldn’t have a problem throwing money at road construction, except Congress has ZERO credibility in spending the money it has now. Where was all the construction when oil prices were low (lower asphalt costs) and consumption was high (greater revenues)? Oh yeah, being sent for study upon study and mass transit systems. And not for these critical repairs Obama says are needed.

I’m now currently reading Henry Hazlitt’s “Economics in One Lesson”. It covers many of the topics involved here, including taxation and public works. Perhaps Obama should read the first 50 pages and see where that takes him. Probably nowhere, but then maybe he won’t put out drivel like this proposal.

Simple answers to silly questions

Question: How does the United States attain energy independence?

Answer: Ban energy imports.

Oh, you don’t like that answer? Well, that’s the only way we’ll get there.

Of course, it depends on what you mean by energy independence. First there’s the neo-mercantilist/conservative view, which is independent from foreign energy. Because the foreigners have lower labor and production costs, any reduction in cost as a result of moving to a different energy plan will drive out domestic suppliers first. Look to the 1980’s and remember all the wildcatters in Texas capping the wells. That’s what will happen when prices go down when demand decreases while supply increases (e.g. late 70’s to the early 90’s). So the only way to not let those dirty, anti-American foreigners get our money is to not buy their goods. So you have to ban energy imports.

Or you’re a liberal/environmentalist, who believes energy independence is being independent from any energy. Here, there’s a couple of ways of doing it. The most harmful is to tell people to not use energy. It’s anti-freedom and will be costly to enforce (you try being the one to tell people they can’t use their AC in the South during the summer). The second-best option is to make people want to use less energy. Right now, there’s the going green movement, which is basically a way of shaming people into using less energy. It’s working, but it can only go as far as people are willing to believe the guilt. The more powerful motivator is economics, more specifically prices. Using gas prices as an example, during the Hurricane Katrina aftermath, people were alot more willing to carpool and use less gas when gas was at $4.50 a gallon (remember this is 2005). More to the point, it was a sudden increase that forced people to change. Drivers can adapt their habits when the price doubles over a span of many years (prices went from $1 to $2 between 1996 and 2005), but are in much more of a shock when the price increases much faster ($2 to $4 between 2005 and now). When you’re in shock, you’re more willing to make more drastic changes. If you’re in favor of decreasing the use of gasoline, then faster increases are preferable to slower ones (Yes, I’m talking to you, Sen. Obama).

So no matter if you’re Sean Hannity or Nancy Pelosi, there’s one fast and easy solution to energy independence. Make the US an island. That is, if you’re really interested in the idea and not using it as a political point. Somehow, I think that may just very well be the case with “energy independence”.

Getting a consumer cost for Natural Gas Vehicles

I’ll have more to say about T. Boone Pickens’ plan on moving the US from an oil-based transportation infrastructure to natural gas based in a little bit.  But I first wanted to get the cost of Natural Gas to power consumers vehicles first.

In South Carolina, the gas cost for one million BTUs (MMBTU) of natural gas is $12.9787.  The only production natural gas vehicle is the Honda Civic, which has a fuel tank of 8.03 gallons of gas equivalent (GGE).  GGE is the standard unit for natural gas powered vehicles.  One GGE is 115,000 BTU so a fill up of a Honda Civic will involve 923450 BTUs of energy or .923450 MMBTUs.  So a fill up would be $11.95.  But that’s for 8 gallons equivalent, or a gallon of gas at $1.492.  Which puts us at where we were in late 2003/early 2004.

Keep in mind that this based on the local natural gas monopoly’s price for a vastly different market (primarily industrial use and consumer heating).  Very little is currently used for transport (other than the local bus system).  Moving to a mass consumption pattern like gasoline would be a very different animal indeed.